Nomenklatura, state monopoly, and private enterprise

So far attention has been focused on the determinants of self-employment in Western market economies. In this chapter we shift our attention to the centrally planned economies of Eastern Europe and the former Soviet republics.1 In particular, we investigate political economic conditions that may stimulate or inhibit a transition from a centrally planned economy to a market economy. These conditions can be seen as possible determinants of self-employment, as self-employment is only allowed in a market economy. In our analysis we use a general-equilibrium model of the kind presented in Chapters 2 and 3 of this book.